Acquired 12 multi-unit residential properties, comprised of 3,752 suites
located in the U.S. for US$450 million financed by the assumption of
in-place mortgages of US$218.7 million and newly arranged mortgages of
US$57.7 million;

Acquired five Toronto area hotels for a total purchase price of $70.6
million financed by a mortgage of $46 million; and

Refinanced one multi-unit residential property in the amount of $35.8
million, at an interest rate of 2.96% for a term of 10 years.

OPERATING HIGHLIGHTS

Total revenues increased by 28.8% to $129.8 million compared to $100.8
million in 2012;

The Company recorded a land lease arbitration expense of $20.2 million
(see Land Lease Arbitration section);

Comparative net operating income increased by 2.9% to $45.3 million
compared to $44.0 million in 2012;

Normalized funds from operations, which excludes the land lease
arbitration expense and other non-recurring items, increased by 44.2%
to $34.2 million, or $2.69 per share, compared to $23.7 million, or
$1.84 per share in 2012;

Weighted average interest rate of mortgages payable is now 4.51%; and

Total assets as at June 30, 2013 are $5.1 billion (16% increase over
December 31, 2012).

All amounts in thousands of Canadian dollars, except for per share
amounts, unless otherwise noted.

FINANCIAL HIGHLIGHTS

Three months ended June 30

Six months ended June 30

(In thousands of dollars)

2013

2012

2013

2012

Revenue from income producing properties

$102,324

$77,459

$194,012

$154,224

Management and advisory fees

15,929

18,089

32,156

34,588

Interest and other

4,737

4,039

6,695

7,940

Sales of product and land

6,820

1,210

8,044

2,534

Total revenues

129,810

100,797

240,907

199,286

Revenue from income producing properties

$102,324

$77,459

$194,012

$154,224

Property operating costs and realty tax expense

(46,721)

(33,230)

(90,619)

(68,281)

Land lease arbitration expense

(20,158)

(355)

(20,513)

(710)

Net operating income

$35,445

$43,874

$82,880

$85,233

Funds from operations (FFO)

$20,027

$23,718

$66,929

$66,242

FFO per share - basic and diluted

$1.58

$1.84

$5.25

$5.13

Net income attributable to common shareholders

$22,950

$91,274

$122,599

$142,936

Net income per share - basic and diluted

$1.80

$7.08

$9.62

$11.06

LAND LEASE ARBITRATION
The Company leases the land underlying a mixed-use property, located in
Toronto, Ontario (the "Land Lease Property"). In accordance with the
terms of the lease, the land rent is based on 6% of the fair market
value of the land and the rent was scheduled for reset on July 1,
2010. Since the lessor and the Company were not able to reach an
agreement on the fair market value of the land, the matter was
appointed to an Arbitration Tribunal (the "Arbitrators") and on June
21, 2013, a majority of the Arbitrators awarded their decision that the
land should be appraised as if vacant and unencumbered by a lease which
resulted in the annual land rent increasing from $2.8 million to $10.8
million for the land lease property.

As a result of the increase in the annual land rent, the fair market
value of the Land Lease Property has decreased by $60 million during
the three months ended June 30, 2013. The decision delivered by the
minority of the Arbitrators would have resulted in an annual land rent
of $3,600. The Company has appealed the Arbitrators' decision.

NET INCOME
The Company's net income attributable to common shareholders for the
three months ended June 30, 2013, was $23.0 million ($1.80 per share)
compared to $91.3 million ($7.08 per share) for the same period in
2012. The decrease in net income of $68.3 million for the three months
ended June 30, 2013, was primarily due to the increase in the land rent
arbitration expense of $19.8 million, a decrease in fair value gains on
real estate properties of $103.4 million, $60.0 million of which is due
to the Land Lease Property, an increase in interest expense of $5.7
million, an increase in other expenses of $1.9 million due to the
transaction costs incurred on the acquisition of the hotels and a
decrease in management and advisory fees of $2.2 million. These items
were partially offset by an increase in NOI from the acquisitions
completed in 2013 and 2012 of $10.0 million, an increase in comparative
NOI before the land rent arbitration decision of $1.3 million, an
increase in the net gain on the residential REIT units of $30.5
million, an increase in equity income from investments of $3.5 million,
an increase in net sales of product and land of $2.0 million, a
decrease in property management and corporate expenses of $1.1 million
and a decrease in income taxes of $14.7 million.

NET OPERATING INCOME

(In thousands of dollars)

Three months endedJune 30

Six months endedJune 30

2013

2012

2013

2012

Net operating income - Canadian properties

Multi-unit residential - Canada

$14,589

$15,076

$28,061

$28,323

Hotel

967

-

1,421

-

Retail - Canada

10,005

8,631

18,216

16,687

Office and industrial

10,229

10,148

20,140

20,008

35,790

33,855

67,838

65,018

Net operating income - U.S. properties in U.S. dollars

Multi-unit residential - U.S.

US$13,451

US$4,315

US$23,203

US$8,861

Retail - U.S.

US$5,911

US$5,952

US $11,775

US$11,945

US$19,362

US$10,267

US$34,978

US$20,806

Exchange amount to Canadian dollars

451

107

577

119

Net operating income - U.S. properties in Canadian dollars

19,813

10,374

35,555

20,925

Net operating income before land lease arbitration expense

$55,603

$44,229

$103,393

$85,943

Land rent arbitration expense

(20,158)

(355)

(20,513)

(710)

Net operating income

$35,445

$43,874

$82,880

$85,233

Net operating income ("NOI") for the three months ended June 30, 2013,
decreased by $8.4 million to $35.4 million compared to $43.9 million in
2012, representing a decrease of 19.2%. The decrease was predominantly
the result of the increase in the land lease arbitration expense of
$19.8 million which was partially offset by an increase in NOI from the
acquisition of the hotel properties and the U.S. multi- unit
residential properties acquired in 2012 and 2013 which increased NOI by
$10.0 million.

For the three months ended June 30, 2013, the Company recorded FFO of
$20.0 million ($1.58 per share) compared to $23.7 million ($1.84 per
share) in 2012. The decrease in FFO of $3.7 million is predominantly
due to the increase in the land rent arbitration expense of $19.8
million, a decrease in management and advisory fees of $2.2 million, an
increase in interest expense of $5.7 million and an increase in
distributions of $2.6 million to Morguard Residential REIT's
non-controlling unitholders. These items were partially offset by an
increase in NOI from the acquisitions completed in 2013 and 2012 of
$10.0 million, an increase in comparative NOI before the land rent
arbitration decision of $1.3 million, an increase in sales of product
and land of $2.0 million, an increase in Morguard REIT's equity
accounted FFO of $1.5 million, a decrease in property management and
corporate expenses of $1.1 million and a decrease in current income
taxes of $9.7 million. The change in foreign exchange rates had a
positive impact on FFO of $177.

Excluding the net of tax impact of non-recurring items, including the
increase in the land rent arbitration expense of $19.8 million, FFO for
the three months ended June 30, 2013 would have been $34.2 million or
$2.69 per share versus $23.7 million or $1.84 per share for the same
period in 2012, which represents an increase in FFO of $10.5 million or
44.2%.

THIRD QUARTER DIVIDEND
The board of directors of Morguard Corporation announced today that the
third quarterly, eligible dividend of 2012 in the amount of $0.15 per
common share will be paid on September 30, 2013 to shareholders of
record at the close of business on September 16, 2013.

Readers are cautioned that although the terms "Net Operating Income",
and "Funds From Operations" are commonly used to measure, compare and
explain the operating and financial performance of Canadian real estate
companies and such terms are defined in the Management's Discussion and
Analysis, such terms are not recognized terms under Canadian generally
accepted accounting principles. Such terms do not necessarily have a
standardized meaning and may not be comparable to similarly titled
measures presented by the other publicly traded entities.

The Company's unaudited condensed financial statements for the three
months ended June 30, 2013, along with the Management's Discussion and
Analysis will be available on the Company's website at www.morguard.com and will be filed with SEDAR at www.sedar.com.

Morguard Corporation is a real estate company, which owns a diversified
portfolio of 121 retail, multi-unit residential, office and industrial
properties comprising of 15,862 multi-unit residential suites, 1,056
hotel rooms and approximately 7.1 million square feet of commercial
leasable space. Morguard Corporation also owns a 43.3% interest in
Morguard Real Estate Investment Trust and a 48.7% effective interest in
Morguard North American Residential Real Estate Investment Trust.
Morguard also provides advisory and management services to
institutional and other investors. For more information, visit the
Company's website at www.morguard.com.